When will the Faba market return to normal? Clearing the Egyptian Surplus.
- Simon Hutt
- 7 days ago
- 4 min read
Executive Summary
We know that Australian faba bean pricing continues to be set primarily by Egypt, the world’s dominant importer and the key determinant of export parity. Heavy Australian supply - reinforced by ABARES’ near-record production forecasts - further limits upside potential. As a result, any domestic price improvement is expected to be gradual, timing-dependent, and constrained.
This report focuses on the Victorian export zone for pricing (Geelong/Melbourne) and models three domestic price scenarios based on Egypt’s clearance of an estimated 170 kmt surplus. The timing of surplus liquidation, rather than its size, is the most important factor shaping price trajectories.
A firm market is expected through January, followed by a likely soft patch in February as bulk exporters finish buying and depart, and domestic feed buyers get forward cover on spreads. Beyond this, the recovery pathway diverges depending on Egypt’s re-entry timing.
1. Current Market Position
Market Bids
There is currently low engagement from growers.
DTB (Direct-to-Boat) bids at Geelong have temporarily lifted prices to ~$450/mt (#1), artificially setting the near-term market.
These DTB opportunities are short-lived due to berth constraints and will revert to normal export pricing (as will competing bids) once capacity fills.
Another competing bid has reached this level but is a short cover with limited tonnage.
Domestic Feed Market
Feed buyers across NSW, VIC, and SA are actively covering 3–6 months of requirements, keeping upcountry bids supported.
GM Feed bids have risen to meet the current market, but once spreads are covered, the activity will drop.
After coverage is complete, liquidity is expected to soften materially.
Supply Pressure & Export Parity
ABARES confirms continued high national supply, limiting upside regardless of offshore shifts.
True export parity sits nearer $420/mt (flat #2) based on current Egyptian bids (minus export costs) and recent AUD appreciation.
We will use this as a base level for our modelling.
It is important to note that some current #1 bids (with a discount #2) with a higher face value, may be roughly equal in net terms (see point 4.).
2. Egypt’s Surplus: The Critical Variable
Egypt’s 170 kmt surplus is the largest factor delaying a return to normalised demand.
Clearance involves:
Domestic food-service consumption
Subsidised distribution
Forced liquidation by banks of distressed cargoes (including an additional 30kmt currently circulating)
Secondary-market discounting
The seasonal lift in demand during Ramadan and Eid festivals helps reduce stocks, but not enough to meaningfully speed up clearance without importers re-entering the market.
Surplus Clearance Timing Scenarios
Scenario | Expected Clearance Timing | Market Impact |
Fast | July - August | Early buyer re-entry stabilises prices sooner |
Base | September - October | Most realistic; gradual improvement |
Slow | Late Q4 or early 2026 | Extended stagnation and delayed recovery |
The key driver is when Egypt resumes buying - not how much they purchase at full normalisation.
3. Price Scenarios - All Paths Begin at ~$420/mt
The Australian market is currently supported by DTB premiums and price-matching pressure - not true export demand.
In fact, many major exporters have not shown a bid this season, amid reports of them holding large 24/25 stockpiles at Egyptian ports.
Exporters who are buying, face margin challenges above $420/mt due to:
Rising AUD reducing USD-denominated returns
Tight margins for full-cargo execution
Egyptian traders signalling softer bids ahead
Many growers have highlighted that fixed input costs create natural price floors, restricting engagement should bids fall materially.
Modelled Price Outcomes (base price $420)
Scenario | Egypt Re-Entry | Price Range (AUD/mt) | Notes |
Fast | Jul–Aug | 440–450 | Earlier demand supports firmer values by Q3 |
Base | Sep–Oct | 435–445 | Most likely outcome given current indicators |
Slow | Late Q4–2026 | 425–435 | Surplus persists; upside capped |
The current market bids (DTB excluded) above our $420 pricing infers tighter export margins, and reflects the competitive pressures on buyers in the near-term.
Expected February Dip
A temporary price lull is also possible in February once:
Exporters finish bulk programs
Domestic feeders conclude forward cover
This may create a short-term standoff in a thin market before scenario-driven paths emerge.
4. Specs, DTB Influence & Delivery Terms
GTA Specs & Quality
DTB Bids
DTB temporarily inflates market values because buyers avoid $25–30/mt of storage, receival, and finance costs.
Once DTB capacity is filled, bids revert to export parity.
These bids represent good selling opportunities if the terms suit the seller.
Delivery Terms Matter
Buyer’s Call / DTB delivery introduces operational and timing risk.
As-Harvested / As-It-Comes provides growers more control over freight timing & price, backloads (e.g., fertiliser, urea), and labour scheduling.
A slightly lower price with better terms often beats a higher Buyer’s Call bid once net returns are calculated.
5. When Does the Market Normalise?
Normalisation occurs when Egypt resumes predictable, large-volume buying, not when prices elevate sharply.
Market Normalisation Indicators
Regular importer presence
Stable and transparent bid structures
Export pricing (not DTB) guiding accumulation
Consistent accumulation windows for exporters
Timeline by Scenario
Fast: Mid-year 2025
Base: Q3–Q4 2025
Slow: Early 2026
Until then, the market remains timing-sensitive and structurally capped.
6. Grower Strategy in a Low-Upside Environment
Upside remains limited outside the next 6–8 week window where short-term spikes may occur.
Strategic Considerations
Holding grain carries quality, storage, and financing risks with no strong price appreciation catalyst.
Growers should focus on net return, considering:
Flat-spec bids
DTB timing windows
Delivery flexibility
Freight optimisation & backloads
A structured selling program is likely to outperform reactive price chasing.
7. Sensitivity Analysis
This table illustrates how key variables influence Australian bid levels from a trade perspective:
Variable | Low Case | Base Case | High Case |
AUD/USD | 0.63 → +$10/mt benefit | 0.66 (neutral) | 0.69 → -$15/mt decline |
Egypt CFR Bid (USD/mt) | +$10 → +$12/mt | $420 benchmark | −$10 → −$12/mt |
Australian Supply Pressure | Tight → +$5/mt | Normal | Heavy → −$10/mt |
DTB Capacity | None → −$25-30 /mt | Normal seasonal | Strong DTB demand → +$25-30/mt |
8. Key Takeaways
Egypt remains the global price maker for faba beans.
Surplus-clearance timing drives all recovery scenarios.
Large rallies are unlikely; improvements will be incremental.
DTB currently props up prices but is temporary.
Heavy Australian supply caps gains, even under bullish offshore conditions.
February dip likely once buyers complete coverage.
Market stabilisation begins only when Egypt returns to steady import activity.
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